Flanagan State Bank Direct Deposit Benefits: Get Paid Faster and Safer

Direct deposit is an increasingly popular way to receive a paycheck and other regular sources of income these days, and it’s easy to see why. It allows you to receive your funds faster and more securely than paper checks, saving you time and protecting you against fraud. Direct deposit can also help you with budgeting as your deposits become much more predictable without having to wait for checks to clear. More than 92% of American respondents said they used direct deposit for their wages, according to one survey, with just 3.7% still using paper checks. In this blog, we’ll explain what direct deposit is, how it works, and why so many people prefer to use it for their paychecks and other sources of income.

What Is Direct Deposit?

Direct deposit means your paychecks and other sources of income, such as Social Security benefits, are transferred directly from bank to bank. When you set up direct deposit with your employer, you would no longer receive a paper check, and your funds would automatically show up in your bank account.

Why Direct Deposit Helps You Get Paid Faster

With paper checks, you have to wait for your employer to hand out your paycheck at work. Many employers don’t do this until the end of the day on payday. You’ll then have to visit a bank branch or an ATM to make a deposit. If you work remotely or receive income from an investment or retirement fund, you’ll have to wait for each check to arrive in the mail before you can deposit it into an account. You get paid faster with direct deposit, because the transfer is made between banks without having to wait for a paper check and take the time to deposit it into your bank account.

Why Direct Deposit Is Safer Than Paper Checks

Last year, the FBI and the U.S. Postal Service warned that check fraud is on the rise, with a significant amount of it happening through mail theft. Also, last year, the American Bankers Association said check fraud had increased by 385% since the coronavirus pandemic.

Scammers can take a stolen check and do what’s known as “check washing,” where they physically alter it to change the recipient and the amount. They can also do “check cooking,” where they create a digital image of a paycheck, alter it, and use high-quality printers to create several forgeries. Scammers then deposit the checks into their own accounts and hope to transfer the funds before they get caught. Of course, scammers don’t just target paychecks; they’ll take advantage of any kind of check they can steal.

Direct deposits are sent electronically through the automated clearinghouse (ACH) network. The IRS considers direct deposit to be the safest and quickest way to receive your refund and says eight out of every 10 taxpayers receive their refunds through direct deposit. The Social Security Administration (SSA) stopped issuing paper checks last year because of the security risks and because less than 1% of beneficiaries still received their benefits through the mail. The SSA reported that direct deposits were faster, less expensive to issue, and more secure than paper checks, with paper checks being 16 times more likely to be lost or stolen compared to electronic payments.

Everyday Convenience of Direct Deposit

With direct deposit, you can receive your funds much more quickly, which allows for easier budgeting and bill payments. It also reduces your chance of fraud.

Less Waiting On Payday

On payday, some employers like to wait until the very end of the day on payday to hand out checks. Others might send them through the mail, especially for remote workers. With direct deposit, your funds typically show up in your account the morning of each pay period.

Lower Risk of Lost or Stolen Checks

As mentioned above, stolen checks can become a lucrative payday for thieves. Of course, checks can also get lost in the mail or take an unusually long time to be delivered. With direct deposit, your funds can be transferred quickly and automatically.

Easier Budgeting and Bill Payments

Many people are living paycheck to paycheck these days, and it can take one to two business days for most checks to clear (sometimes longer, depending on the institution and the amount). If you’ve ever had to hold off on paying a bill until you could deposit a paycheck and wait for it to clear, direct deposit can help reduce that stress because you know your income will automatically be deposited on payday and give you quicker access to your funds.

How to Set up Direct Deposit with Your Employer

If your employer offers direct deposit, your boss or the human resources department can help you set it up. They may have a form for you to fill out where you’ll provide them with your bank’s routing number and your own account number. The routing number is a nine-digit number at the bottom left corner of your personal checks. Your account number will be to the right of the routing number. You can also find your account number on your bank statements, whether you receive them electronically or through the mail. The routing number for Flanagan State Bank is 071118264. You may have to give your employer a voided check to confirm this information. Just write “void” in large letters across the face of the check, without obscuring the routing and account numbers at the bottom.

How to Set up Direct Deposit with the IRS

When you fill out your federal income tax returns, simply choose direct deposit as your refund method or tell your tax preparer that you want direct deposit. You’ll need to provide your bank account number and routing number.

Talk to Us about Switching to Direct Deposit

The first step towards safe direct deposit banking is to open a checking account, if you don’t already have one. If you already have an account, contact us online or reach out to your local branch about setting up your Illinois checking account with direct deposit. You can also check with your employer and anyone else who sends you paper checks on a regular basis through the mail. You might also consider enrolling in online and mobile banking. You can use them to pay your bills online, check your balances, and transfer funds between accounts. You can also set up account alerts for transactions above a certain amount, which provides an extra layer of security.